Coinbase halted hiring as Wall Street love affair cooled

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“I just received an email today letting me know that my job offer has been rescinded… due to a massive change in the hiring plan at Coinbase.”

That’s Ashutosh Ukey, who is among the tech industry workers who saw their hopes of working at one of the biggest digital asset exchanges dashed after Coinbase scrapped bumper deals as part of a effort to reduce hiring.

May 16, Coinbase said that it would slow hiring in response to a continued market downturn. Then, last week. the company said that he would rescind some offers and extend a hiring hiatus for the “foreseeable future”.

“It was devastating for me,” Ukey, a machine learning programmer, wrote on LinkedIn.

The decision to cancel the offerings sparked speculation about the reasons for Coinbase’s cost-cutting measures. And yet, these moves are far more likely to be a direct response to Wall Street predictions than any other type of exogenous factor related to the so-called crypto winter.

Previously, market research analysts covering Coinbase shares seemed to remain loyal to the company despite its share price falling.

But over the past few months, banks have reduced their price targets, with the average price target falling from $279 the week of April 22 to $145 at the time of writing, according to The Block Research. The latter figure represents a premium of 96% over the current fair market price.

Source: The Block Research, Factset

A reduction in business spending — total operating expenses weighed in at $1.7 billion in the first quarter of 2022 — could help win back analysts who highlighted the expense in earnings calls.

“Operating expenses were higher than expected as COIN hiring was robust, increasing headcount by 33% in the first quarter,” said a May 10 analyst note from Bank of America Global Research.

Adjusted EBITDA – a measure of a public company’s financial performance – came in at just $20 million, well below Wall Street’s estimate of $448 million.

As for hiring itself, Goldman Sachs’ Will Nance described the 1,200 hires in the first quarter as a surprisingly “large” number. during the call of the results of the first quarter of the exchange. In response, Coinbase Chief Financial Officer Alesia Haas said slowing hiring was one of the levers the company has to reduce spending.

Admittedly, not all analysts are hung up on costs. In an interview with The Block, BTIG Mark Palmer said the focus on adjusted EBITDA is “misguided”, adding that Coinbase – despite its large footprint in crypto – is still a “work in progress”.

“What you really want to see if you’re an investor in a business at this stage, a growing business, that’s in a competitive environment…you want to see investments, you want to see those expenses,” he said. declared.

Yet, while Coinbase’s cost reduction will have a clear impact on the bottom line, there is also a more intangible cost to withdrawing offers from potential employees. The emails made public indicate that Coinbase initially told new employees that their jobs would be secure.

In an email obtained by Blind, a pseudonym-focused social network for professionals, and shared with The Block, the company said it had a “market volatility” plan and would “not cancel not offers from employees who have already signed or received an offer from us.”

Internally, employees are concerned about the reputational backlash of the move and the burnt relationships. Multiple sources told The Block that Coinbase remains understaffed despite its hiring efforts over the past year and that employees are overworked in what is known to be an intense and rapidly changing culture. .

“We have an intense work culture and are regularly pushed out of our comfort zones,” said LJ Brock, the company’s chief human resources officer. Noted in the old days.

© 2022 The Block Crypto, Inc. All rights reserved. This article is provided for informational purposes only. It is not offered or intended for use as legal, tax, investment, financial or other advice.


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